Binance Announces $10 Million Compensation Plan

Binance announced that it has made a decision to compensate its users who lost money during the attack on DeFi project, Cover Protocol earlier this week. Hackers minted an unlimited supply of the Cover coin earlier this week. Binance has allocated more than $10 million for affected and eligible users.

According to the official announcement, Binance will utilize its Secure Asset Fund to compensate users. The mentioned amount will be distributed in BUSD and ETH. The exchange aims to protect its users in the future as well.

“After reviewing the latest compensation plan from the COVER team, we realized that a large number of Binance users who bought COVER on Binance after COVER’s proposed snapshot time at 2020/12/28 8:11:06 AM (UTC) would have their tokens become worthless. In response to this, Binance has decided to proceed with a plan that upholds our core principle of protecting our users. In addition to the compensation plan from the COVER team, the exchange will utilize the SAFU Fund to recompense a total of $10,107,505 USD (distributed in 8,171,634.10 BUSD and 2,581.16 ETH) to affected and eligible users, with the details listed out below,” the official announcement states.

Cover Hack

Finance Magnates reported earlier this week about an attack on the Cover Protocol when the hacker exploited the Blacksmith farming contract of the project and minted infinite Cover tokens. The price of Cover token crashed more than 98% following the news. The project team requested liquidity providers to restrict activities related to the Cover token as the attackers minted unlimited supply. Binance halted the trading of Cover token following the news.

Binance explained the scenario in the latest announcement. “A large number of minted COVER tokens (greater than the COVER circulating supply) were bought by arbitrageurs on decentralized exchanges and deposited on Binance, causing the price of COVER to decrease at an alarming rate, and resulted in many Binance users experiencing significant losses. In the days following the attack, the exchange has kept in close communication with the COVER Protocol team to discuss various compensation possibilities for our users involved,” the exchange mentioned.